May 13, 2010

Soda Lobby Offers to Pay Philly Not to Pass Soda Tax

The fight over a soda tax here in Philly is coming down to the wire. The city council is debating Mayor Nutter's 2 cents per ounce tax on sweetened beverages as we speak. The prospects for the full tax aren't very good. Councilmembers already have stated a preference for raising property taxes on wealthier residents rather than something like a soda tax which might hit low-income residents harder.

And the fact is that Nutter's tax would be messy to implement in any case. As the Philadelphia Inquirer has explained, only the state can levy an excise tax, i.e. a tax on a specific item. Philly would require merchants to report sales of sweetened beverages and then pay an amount calculated from that figure. As a result there's no guarantee that a merchant would even add the tax to sodas. They could raise the price of any product and treat soda as a loss leader, if they so chose. But with negotiations over revenue in full swing, the possibility of a one cent or even 1/2 or 3/4 cent per ounce tax apparently still exists. In fact, it's serious enough to convince the soda lobby, that group you love to hate, to engage in a bit of bribery incentivizing of its own:
Councilman Frank DiCicco in Council Thursday afternoon said the "soda industry" has offered to pay the city $10 million over two years if officials backed off on a proposal to tax sweetened beverages by the ounce.
Stay classy, guys! I just hope the city council does the math and realizes that a single $10 million payment does not equal annual, thus ongoing, revenues from even a 1/2 cent per ounce tax.

The good news? Nutter doesn't appear to be kidding about his commitment. According to reports, he's unwilling to consider any further service cuts unless the council agrees to a soda tax. Who, I wonder, will blink first?

UPDATE: According to the Philly Daily News, property tax, yes. Soda tax, no -- although Nutter has another week to get the votes for one before the final budget is approved. No word yet on whether the soda lobby will pony up its $10 mil. Maybe they'll wait to see if Nutter can pull this out in the end.

Photo credit: Poolie

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